Posted
by
ScuttleMonkey
on Tuesday October 24, 2006 @12:35AM
from the coopetition dept.

IT Managers Journal is reporting that a Canadian communications student is trying to put a new spin on open source business models. Greg Dean, a student at Simon Fraser University, is attempting to merge the principles of open source with that of a co-op and a regular corporation. From the article: "On the first slide of his presentation, Dean described the ICT/OS as a 'participatory, self-managed workers' business' designed for 'getting the benefits of a corporation through the convivial democracy of a co-op.' Punctuated by dozens of questions, the rest of the presentation explained exactly how he thought this goal could be achieved. In his vision, the co-op would involve three types of members: full members, who are freelancers in high-tech professions and have full voting rights; associated members such as lawyers who provide services to the co-op; and non-members with an investment in the company."

Basically, the people with vested interest in the software don't get a say in how it's developed but a bunch of hippies do. It isn't a business model, it's a model for communism. Mutual cooperation results in people getting ripped off because those that don't leech off those that do.At the end of the day someone has to pay the bills and there is no getting around that.

I don't want to work at a co-op I want to pay my mortgage. If you've ever seen a commune it's a bunch of lazy bums waiting for someone who ca

His business plan is to do business the Costco way, using a cooperative to get products to sell in bulk at low rates. The twist is that said products would actually be Open Source products that some members of the co-op (among others) would be helping to develop... therefore meaning that whatever the members demand will be provided (there is monetary incentive to make the changes and bugfixes). He also appears to be allowing outsiders to purchase the products.

The traditional competitive business model goes something along the lines of: Kick competitors in the balls...., gouge customers as hard as you can..., make as much profit as you can and screw the consequences (social, environmental,...)

As well as the micro-credit Muhammad Yunus scored his Nobel for, he is also proposing that some businesses might restructure around goals other than profit. Yes, if you've been a corporation watcher, it is a hard concept to get your head around.

Interesting interview on BBC a few days back, can probably found on the Beeb's website.

There's a significant difference between using money and being controlled by Money. Having money serve you, and you serving Money...Money is a very useful concept, no doubt about it. But as it has been said:

1 Timothy 6:9-10People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction. 10For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with m

It goes like this:1: get a bunch of people together2: do OSS democratically controlled software3: PROFIT!!!

The problem is that doing OSS and having a democratically controlled software process has little to do with making money. In fact, I would say that even if you have a popular software project this "plan" has little to do with making profit. It's nothing really new - it is simply a description of how most OSS projects are ran. At least pretty much any I've ever dealt with.

As far as I can tell money in an OSS project is either made through (to a lesser extent) distribution or (mostly) from support

This is where the OSS model gets confusing for me - Let's say I make a little application (next great chat applet, or a little addictive game or what have you). I work evenings and weekends on this thing and once it's past beta and done I want to sell the thing. If I OSS it, how do I earn money? Support? It installs and it goes - What support? I suppose a Yahoo group might do t

Quite easily:
Step 1: Flip through an economic dictionary to find 10-15 words thathave at least ten letters each.
Step 2: Write these words into a paragraph that with correct spelling and grammar. This paragraph does not have to be comprehendable.
Step 3: Submit paragraph to slashdot.
Step 4: Profit!

Every co-op has it's own business plan. He's basically providing an alternative structure for organization rather than a foundation or a corporation. The co-op model allows for profits and allows/requires money to be redirected back into the project, and is more egalitarian than a regular corporation--since it's employee owned. Other than that all other aspects of the business still require definition by the member/owners.

It isn't employee owned. Notice how the investors are non-members. It is employee run and investor owned, which is stupid. Fuck, most businesses are employee owned as most people are employees and most companies are owned by and large through pension funds / RRSPs. This is stupid hippy bullshit through and through. The whole point of capitalism is helping society by mutual self-interest.

...why management thinks IT people have no grasp of practical business concepts.

Think of this as a credit union for software development. A hybrid between open source and a pure commercial venture. Co-op business models and profits are not mutually exclusive. The credit union I belong to operates profitably, as will any that want to stay in business. The local farmer's co-op in town makes a profit, then cuts a check for part of it back to the members. Grocery co-ops thrive, though you rarely hear about them because they don't usually have an advertising budget.

He can't be more specific on how they would operate because there's no way to predict that without actually forming one. The structure and operation are more fluid than a commercial venture. And the character and operation will change as the membership changes over time.

I think once the co-op development model undergoes more development it will be recognized as the next step in the evolution of software as a resource commodity. It's a business model that's been around a lot longer than any of us. It's just strange to those of you growing up on the internet because it involves human interaction in meat space.;)

But the issue isn't the validity of co-ops. Successful co-ops are still selling something. The farmers co-op doesn't give its food away. So if there's a good general business model for making profit from FOSS, it could be used in a co-op, but the co-op itself isn't the solution.

... why IT people think managment have no clue about technical stuff.Saying a thing like "A hybrid between open source and a pure commercial ventures" just demonstrates that who says it can't grasp the most fundamental concepts regarding sofware licensing. Although software licensing and the running of a company intersect under many circymstances, one thing lives in a completely different context from the other and is mostly independent from each other.

What's even better is that this guy is a comm major. At my university the communications building looks like a set out of 24. Shiny new Sony desktops, high res video projectors, the climate control actually works. Even the lighting in the bathrooms is a nice rosy color that miakes your skin and hair look nice. And then when you walk by the classroom they're all in there browsing the web and talking.

The physics building on the other hand, where millions of dollars in research is being conducted every day l

This looks like more of that randomised babble I get from my junkmail folder... Could anyone translate into inoffensive plain english? How is this different from any other business plan? Honestly?

Every business plan I've ever seen (for something beyond a sole proprietorship or partnership) takes for granted that the business will be established as either an S-Corp, LLC, or C-Corp. I'm not sure how business formation works in Canada. However, based on the article, it appears that the idea is to create a business structure that borrows features from a co-operative association (ex: a co-op grocery store or a co-op lending organization), while retaining features of a corporation.

Just because the concept seems a bit convoluted doesn't make it particularly "offensive" to my mind. Many extremely successful businesses have structures that can't be explained in less than 10,000 words, anyway. I'm of the opinion that part of the reason we have companies that do stupid and destructive things is because the legal structures for those companies encourage buck-passing, groupthink, and sublimation of individual responsibility. The article indicates that this new structure attempts to avoid both of those. It will be interesting to see if anyone gives it a try.

Seriously, I'm English and I don't know what those abbreviations mean.

Apologies. Explaining them briefly leaves out a lot of important info, but here's a quick and dirty:

LLC = Limited Liability Company. Handy because you don't have to have a board of directors or issue shares, but as a business owner you're not directly liable as an individual for the actions of the company.

S-Corp = A corporation that is similar to an LLC. Taxes are "passed through" to the owners, rather than applied to the corporat

Sounds to me like a plan to justify adding management and lawyers, who'll attach like leeches without contributing anything except work for more management and lawyers. How this is supposed to help the productive and sales side of the business seems to be undefined. Sure, the production side will get limited voting rights, which are rights they already had and would continue to exclusively have also if not doing this, so that doesn't add anything. Except more paperwork.And why use the word co-op when it

It's kind of like the rest of the business world, but different:Full members, who are freelancers in high-tech professions and have full voting rights - These are usually called "Employees".Associated members such as lawyers who provide services to the co-op - These are known as "Management"Non-members with an investment in the company - These are known as "Investors".... yeah, I don't really know how that's different. Maybe there's no dental plan?

The premise of the idea sounds interesting. I have had opportunities to work on localized open source work at University level in India. My father used to participate in a co-operative and I got to see some of the action up-close-and-personal.
I agree that the two may work well together, but I am a bit concerned how the division of tasks will take place. In co-operatives, (atleast the one that I saw), there is usually a clear division of tasks. This worked ok because

Though the notion of a co-operative is egalitarian, actually, there is a small group of dedicated people, who are most involved

These people who usually form part of the board, are "more equal than the rest" and can actually make people do stuff that is important for the co-operative, but can sound unsavoury

Also, the co-operative is a pyramidal thing, with the people towards the bottom being less skilled than the ones at the top. Its a small pyramid with a wide base, but, it is for sure a pyramid. The only reason the people at the base are willing to work there are, the money generated is for real, (and sometimes, because they trust the people above them to be working for their benefits)

While what I said is nothing new and is already in place in most successful open source models, I find some differences which I would be interested in knowing, how the new model will bridge

A co-operative of software engineers is hard to maintain, since every one comes with a high level of skill sets and the resultant ego. This makes the setting up of a pyramid very hard

While there are successful models of monetization of open source, they are few and far between and most of these models are hard to replicate. This takes away the basic incentive of a co-operative

A co-operative is often a below the radar operation, generating wealth with out too much of recognition. Most opensource projects (the way I see them) work the other way round

Do correct me if I am wrong, but I would love to read more on what other people think on this!

Yet another person determined to destroy the useful word "monetization" by depriving it of meaning. This one is really getting to me.

Monetization means to establish something as being a currency, e.g. gold, silver, perhaps grain in agricultural communities. You mean "of making a profit or getting an income from Open Source." Why can't you just say that instead of using a word that you think makes you sound like some kind of economist? When there is an exchange rate on the currency markets of lines of source code to the dollar, your comment will make sense.

Some good points here:
>> 1. Though the notion of a co-operative is egalitarian, actually, there >>is a small group of dedicated people, who are most involved
I hope that the participatory model or Balanced Job Complex (BJC) arrangement that we will employ in this co-op will address this point, which does seem to be true in many co-ops. Parecon requires that the workers manage the business. BJC allows for members to rotate their roles a little and thus see the operation from different perspe

While there are successful models of monetization of open source, they are few and far between and most of these models are hard to replicate. This takes away the basic incentive of a co-operative...

I don't think so. Think about the dynamic of a company that wants to make a profit on open souce software installation, support, and management. The software is free and available to anyone, so the company's assets are primarily the expertise and skill in using the software, which is seem by the end customers

Communism is a form of government, which competes with democracy. Co-operatives are closer to democracy than the very hierarchical systems of governance that most western organisations follow. So, in terms of regimes that harm people, big western corporations are closer to communism, than co-operatives are.

In theory, communism is an economic model where the workers own the means of production. That's what it means in theory, and something similar was put into practice in Paris during the early days of the French Revolution as the Paris Commune before it was attacked. Cooperatives are close to that form of communism. In practice, a dictator takes power and it becomes a totalitarian government. American corporations are close to that form of communism.

Our group has been operating as a co-operative for about 10 months now. We're on the verge of incorporating, likely as a multi-stakeholder for-profit co-op based in British Columbia, Canada.

We do colocation, virtual servers (Xen), virtual hosting (IMAP, Jabber, Apache, Zope/Plone, Drupal, DNS, etc.), and consulting in a co-operative model. Our members get pricing that reflects, as accurately as possible, the true cost of providing any given service. We also sell to non-members, from whom we attempt to make a profit. Members get the opportunity to provide consulting services through the co-op, and all profits go into improving the co-op's infrastructure and/or providing membership dividends.

We have 16 members, ~US$3,000 in member investments, and a full-cab at a pretty good carrier-neutral colo facility in San Francisco. We have members in British Columbia, California, Hawai'i, Florida, and England. We also have participants in the Czech Republic.

I read TFA and I don't understand why the Slashdot title is "Open Source Business Models". This sounds more like an organisation structure (and a fairly lame one at that) than a business model. Shouldn't a business model outline what they're going to sell, how much they're going to charge, potential revenues, etc. etc.

I totally agree! A business model (also called a business design) is the mechanism by which a business intends to generate revenue and profits. It is a summary of how a company plans to serve its customers. It involves both strategy and implementation. Having started a successful software development company (now 6 years old), I have always kept my eyes open for new ideas and was very excited when I saw this article on Open Source Business Models, as I am yet to find it. Surely there must be people out ther

To put it in Edison's words: Realization is 1 percent inspiration and 99 percent perspiration. A lot of people have some very good ideas.Just yesterday my friend was telling me how pre university schools are useless at telling people who they are and presented me detailed plan how the system could be revamped.It was great and all, but so what? There are bunch of school that offer different programs than standardized school, there are just not so omnipresent.

The way most open source software gets created is by businesses that need to solve a problem but don't want to be in the software business. These people pay for and/or contribute to an open source project because making the project open source lowers their costs and risks. It is essential for them and the other contributors that there are no legal obligations to each other, other than to keep the software itself open and freely distributable.

What's wrong with Dean's proposal is that it makes the false assumption that there is income that's distributed, or that there should be a group of people with decision making power. In fact, most commercially developed open source software has no income that's directly derived from the software, and the ability to fork a project freely is an integral and essential part of open source development. If you take away either one of those properties, you end up with software that may ship under an "open source license", but it's not truly an open source project.

You're making the assumption that the entire point of the proposed business is to create and distribute Open Source Software. What he seems to be doing is creating some sort of umbrella corporation for a group of high-tech freelancers. The goal is to give them all the benefits of a corporation, while maintaining lots of autonomy and a minimum of hierarchy.

If the business plan is too difficult for slashdot geeks to understand, it's too difficult. I failed to see such an incomprehensible business plan would convince enough number of people to invest their precious money, time and energy. I'm a student majoring computer science at Simon Fraser University, and I believe I know a little about co-op, open-source, and business (well, give me a break), but have no idea what the plan is. Count me out.

Before I start laying into this guy, may I say I'm from Scotland and a left-wing voter. I think there's a lot to be said for socialism, social contracts, national health etc. But I'm also met any number of people who like this kind of structure primarily because it gives them a degree of power and influence that a meritocracy wouldn't. I reckon I'm a smart guy (don't we all) but when I see phrases like "we need a sea-change in civilization in order to maintain homeostasis survival" I really want to punch someone...

After RTFA, I can only say the guy is letting his self-confessed bleeding heart get in the way of clear thinking. There is nothing in the business model that is inherently open source. And cooperatives - the examples given from Canada are credit unions and wheat pools - are typically groups of people that have separate businesses or interests but benefit from some kind of shared service or infrastructure. So if, for instance, some of your best freelancers got great opportunities, they wouldn't necessarily need to use the shared infrastructure and suddenly the cooperative is weakened.

When we're talking about shared infrastructure, given the competition in e.g. hosting services, I'm not convinced a cooperative would give you any better value than a reputable company. More to the point, shared infrastructure is a way to reduce costs, not generate revenue - so where's the business model?

Also, look at the structure. The board is also the executive i.e. in terms of decision makers, there's no check and balance. The board is made of at least 60% members. Apparently the board is there in part of prevent the "fascism of the group", which apart from the telling choice of knee-jerk political wording is nonsensical. If the board is mostly comprised of group members, if the group is dominated by special interest groups there's a strong chance the board will be as well.

The board is going to end up being the most skilled individuals. Personally, I'd prefer to have the best managers running a company and the most skilled technicians doing what they do best. I've had some good managers in my time and this is the method that works. Genius programmers who would actually prefer to spend their time managing politics, feel free to disagree!

You'll probably also have the odd board member who got there through politicking, which (forgive my cynicism) often seems to me the reason why people with an interest in community based politics are so keen on it. It can act as a substitute for actual skill and clear thinking.

To paraphrase the bible, there ain't nothing new under the sun. So nothing to see here, move along...

"I'd prefer to have the best managers running a company and the most skilled technicians doing what they do best. I've had some good managers in my time and this is the method that works. Genius
programmers who would actually prefer to spend their time managing politics, feel free to
disagree!"

I thought that your comment was an interesting one. Having people doing what they do best makes some sense to a point. In a Co-Op situation allowing any fixed group

It's a fair point. There are always tradeoffs, and you can only take specialisation so far. Personally, I'd happily get rid of all bureaucrats - I chose my nick because I've so often been pissed off with the hoops a bad contract or bureaucratic process can force you to jump through. There are still some managers who do such a great job of managing projects / companies that all the coop model does is limit your options. I'm not saying that coops don't work, just that they are limited.Coops are not business m

Having read TFA I fail to see what this business model has to do with Open Source per se. What he is presenting is a model for a software development company/co-op but the fact that he wants it to develop open source software is largely irrelevant, isn't it? The same model could equally be used to develop proprietary software and nothing in this article explains (to my untrained eye) exactly how it would make money from developing Open Source software, it merely explains how any profit made would be shared

So this article has some holes and presumptions built into it that are leading people astray.

1. When 'Open Source' is used to mean OS type processes. That is to say that the co-op, through Balanced Job Complexes, participatory management, holoptic (everyone can see everything going on) transparency, etc., will run on these type of processes...So this is not a business model, but a business process model. I have very distinct ideas about how to make this bugger cut throat profitable, including cornering %12 of the Canadian and %5 of the US market but that is up to the membership to decide democratically through the business process model.

2. This is new; it incorporates a complex share structure that no co-op I've come across has, it will apply parecon (see www.parecon.org) principles like BJC, self-management (your say matches you stake in the matter), and collective capital along with collective effort & sacrifice based remuneration. Some of these things are relatively new in of themselves and putting them all together in this frame work is new (although sure, there is nothing new under the sun).

3. I'm not a bleeding heart when it comes to business. After that quote I said something to the effect of our 'community economic development' work (as far as I'm concerned) will be setting up businesses for a parecon framework that will bank based on market development of loyal patrons to co-operative/parecon economies, and just good margins on products and services. If you saw a way to set up a distinct new brand that you could corner a market with and charge a premium, you'd do it too.

4. ICT workers will manage the company with guidance from the board of themselves and professionals like are lawyers, MBAs and accountants, just like any other corporation. But the workers manage it and do so sufficiently because it's in their interests and b/c they take on roles outside of their specific expertise resulting in them having more perspective on the business as a whole and so being able to collectively manage the biz through enterprise software which gives them a holoptic view. There will also be training of workers in basic business management skills and practices.

I'm sure there's more to clarify but I've got an enterprise to set up, a contract to bill for, and a book to write.

Chris Spannos must be grinning his f_cking ears off. Good one, Greg. I think you really got some people thinking with this one. Of course, your typical Slashdotter alread "knows better", but they are mostly beyond hope anyhow. I think some of the lurkers might actually be affected by the merits of a principled democratic business.

*The freedom to run the corporation, for any purpose (freedom 0).*The freedom for anyone inside or outside of the corporation to study how the corporation works, does its business, keeps its books, and makes its outputs and the freedom to adapt it to your needs (freedom 1). Access to inside corporate information is a precondition for this.*The freedom to start up similar and related businesses so you can help your neighbor (freedom 2).*The freedom to improve the business, and sell your improvements to the p

those are all pretty much it, except for legal limits that prevent a couple of those things from being totally completely open. But we tried to make the purpose as broad as possible but under Canadian and B.C. law it does have to be defined for co-ops.I would prefer holoptic, everyone can see everything (that's why we're also including a client/consumer membership class). But it is up to the membership and they might decide against this because we currently have a socio-economic structure that dictates th

*The freedom to run the corporation, for any purpose (freedom 0).Obviously, this is limited to any *lawful* purpose. This freedom isn't so obvious however. Originally, Corporations were restricted to one type of business in their articles of incorporation, such as "trap and sell fur and fur related items" and actions taken outside of that mandate were null and void.*The freedom for anyone inside or outside of the corporation to study how the corporation works, does its business, keeps its books, and makes

And this makes a slashdot headline?
Actually, I first heard about Linux when I sat in on my girlfriend's speech 101 class and a computer science student in the class gave a presentation. That's right, I switch because I thought CDE looked cool.